Despite the rise, foreclosure activity, which includes foreclosure notices, scheduled auctions and bank repossessions, was 16 percent below the year-ago level. It was the 46th consecutive month in which activity declined on an annual basis.

"It is not uncommon to see month-to-month fluctuations that are not indicative of the long-term trend; that is most likely the case with July numbers," RealtyTrac Vice President Daren Blomquist told Reuters.

"If we see a string of four to six months of monthly increases, that will certainly be cause for concern, but we're not there yet."

Decreasing foreclosure activity has helped undercut the supply of properties on the market, pushing prices up and slowing sales. Rising mortgage rates have also helped slow the housing recovery to a crawl.

"The biggest causes for concern when it comes to foreclosure at this point are at the state and local level, in places like New York, New Jersey and Maryland, where foreclosure activity continued a nearly two-year trend higher in July, and in places like Southern California, where we saw annual increases in foreclosure activity following nearly three years of decreases."